A bond is a low-risk debt security. When you buy a bond, you are lending your money to the issuer, which may be a government, municipality, or corporation. In return, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal.
Main reasons to invest in bonds:
Low-risk investment vehicle.
Some bonds (such as Municipal Bonds) can have tax benefits, and suitable for high-net-worth investors
They provide a predictable income stream. Typically, bonds pay interest semiannually.
If the bonds are held to maturity, bondholders get back the entire principal
Bonds can help offset exposure to more volatile market such as equity securities
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